The initial idea behind corporations and companies hiring undocumented workers was that if the workers can’t be tracked, then no one has oversight into what they are paid and how they are treated. One of the only advantages of taking the chance on hiring an undocumented worker is that you can get cheaper labor. But not so fast — that might actually be changing.

Recently released findings show that undocumented workers are actually bridging the pay gap with those who have the legal right to work here. Unauthorized immigrants have traditionally gotten paid as much as 9% less than documented workers with the same background and skill set. But as of 2008, just when the economy was about to drop off, undocumented pay started to increase sharply.

The so-called “wage penalty” has continued to decrease over the past ten years. Currently, the gap is only about 3% between undocumented and legal employees. This information can be found in the National Bureau of Economic Affairs, and suggests that undocumented workers are faring far better than anyone knows. So what is at the heart of the increase in wages?

It wasn’t until 1986 that lawmakers started to ban hiring foreign labor here if the workers were known to be illegal. In theory alone, that made the practice of hiring an unauthorized worker riskier, and therefore, you were able to pay them less. A pedestrian accidents lawyer will confirm that the risk an employer would take in hiring someone who was here illegally would typically result in the immigrant receiving less per hour.

In the same respect, because the workers were here illegally, the employers could pay them whatever they wanted. It was a supply-based wage. Another reason that immigrants who are undocumented get paid less is because you can’t hire them for any occupation that requires a certificate or a background check, which are typically minimum-wage jobs. Although they can have a skill set, they have traditionally been limited by what jobs were available and who would hire them for a specific dollar amount.

One theory about why the wage gap has lessened is that Barack Obama took office. During his presidency, the wage gap went up significantly for undocumented workers. That is most likely because Obama gave a lifeline to those who were here illegally to let them work legally.

Things like the Deferred Action for Childhood Arrivals policy allow undocumented workers to obtain necessary credentials, and it overrode the documentation process. Allowing any person who came to the US as a child to have indefinite protection from deportation and the allowance to work here legally, millions of undocumented workers became “documented.”

It would also appear that the entire system became less strict. Since not many people were being held to the standards of the undocumented laws, those who were here illegally began to demand higher wages and were getting them because of a shortage in many industries where skills are necessary. Since most of the stigma was lifted and people were feeling safer about the possibility of deportation, the entire atmosphere began to change.

Things like sanctuary cities only further lessened the fears that many undocumented immigrants had, allowing them to insist that they be paid nearly the same as their legal cohorts for the same jobs. In fact, in cities where sanctuary is given, the pay between undocumented and documented workers is nearly the same. Those states that have refused to check immigration status have done a disservice to those who are here legally by allowing both legal and illegal immigrants the same rights to work.

The other theory is related to supply and demand. As the market began to crash, fewer workers made their way to America because there simply weren’t the same opportunities. With fewer immigrant workers came more demand and higher pay. A dip in immigration to the US by people looking for better opportunities was likely a cause to lessen the pay gap even more.

There are many theories about why undocumented illegal immigrants are earning nearly the same as their counterparts in today’s job market. Whatever the reason, if Sessions follows through with his promise to enact the laws of the land, do away with sanctuary cities, and return to law and order, undocumented immigrants might not be able to earn the same income, simply because there will be a punishment for hiring them. Also, the immigrants might not be so bold as to demand the same income.

What caused America to be where it is with the decreasing gap between undocumented and legal immigration wages is likely to be unraveled as time goes on and America sees what enforcing the laws of the land will do to the immigrant workforce going forward.

Weathering the Storm: How Political Climates Affect the Financial Markets

There are numerous factors that can potentially have an effect on financial markets and which traders have to be aware of. They can range from extreme weather events, terror attacks, corporate announcements, all the way to the political climate of a country. In most of these scenarios, the ramifications for an economy and the subsequent reflection in the stock markets can be relatively predictable – we expect to see a drop in stock prices when a disaster hits , for example. When it comes to the political climate, however, things become a whole lot less predictable. This is due to various reasons, not least because of the inherently fickle nature of politics itself and the sometimes vast differences in the political cultures and traditions of different countries.

To get a sense of just how a country’s political climate can affect various aspects of a nation’s economy and its financial markets, we’ll take a practical recent example of the USA following President Donald Trump’s election in November 2016. It serves as an interesting case study due not only to its unexpected nature which highlighted the basic unpredictability of political climates, but because it brought about some very interesting reactions and results from businesses and the financial sector in general.

Growth Expectations

A general statement can be made to the effect that a country’s political climate and its economic environment are closely related. Investors, no matter how large their risk appetite, like to have a reasonable assurance of their money’s safety, which is why stock markets are usually the first industries to react to any political climate changes. In fact, research suggest that stock markets follow a predictable general pattern along a four-year cycle punctuated by the Presidential Elections in the USA and perhaps many other countries worldwide, with the market showing signs of increased caution as election season comes around.

Following President Trump’s unexpected victory, many organizations held the hope that the bold fiscal proposals he had talked about during the campaign – including increased spending and tax cuts – would serve to boost the country’s economy. The Federal Reserve actually went ahead and increased interest rates in anticipation of the changes, showing how even the promise of a policy change will directly be felt on the financial market.

Anticipated Regulatory Changes

When a country undergoes a significant political change of pace, it is expected that this will come with significant regulatory standards and practices. It is widely acknowledged that increased government regulation and bureaucratic interference in a country’s economy and industrial activity will usually result in a slowing down of the economy in question.

President Trump had poised to relax the regulatory framework in the country as well as consolidating the numerous bodies tasked with formulating the regulations to make it easier to do business in the country, and this came as good news to organizations and their stakeholders.

Political Stability Concerns

Political stability has a very real effect on the state of businesses within an economy, as we can all agree. While many business owners and stakeholders were encouraged by the promise of deregulation and fiscal policy reform, many were also given cause for concern when it came to the President’s apparent pattern of unexpected and inconsistent policy decisions.

His stance on immigration, promise to wall of the USA’s southern border with Mexico, and his abandonment of previous trade deals all went into fueling anxiety and a sense of uncertainty in the financial markets. This was especially felt in the case of organizations with a global business presence. These feelings decrease investor confidence and often lead to a depreciation in stock market values as the more risk-averse investors keep away.

In Conclusion

When looked at in totality, countries all over the world face the same types of political risks. We’re not talking about complete government collapses such as might occur in times of a coup, but relatively smaller yet high-impact moves and policies by governments on matters such as regulation, currency valuation, taxes, spending, minimum wage laws, labor laws, environmental regulations, and the like.The financial market of a country, being highly sensitive to such shocks, can register an impact when such actions are merely proposed, without their implementation having taken place yet. The impacts may be long or short-term, but they are definitely felt throughout the financial markets.

What a Rising Xi Jinping Means for China and the World

“Watch this man.” These were the three words used by the founding father of Singapore Lee Kuan Yew to describe a relatively unknown Xi Jinping while he was yet to become the President of the People’s Republic of China. Today, in addition to being China’s “paramount leader”, Xi is arguably the most powerful man in the world, and even if leaders across the world were doubtful about it till now, the developments in the previous week were sure to make them think again.

19th Party Congress: How it unfolded

Xi today, Xi forever?

The Communist Party of China assembled the previous week for its 19th Party Congress, a political summit that takes place every five years to decide upon the country’s future and the future is precisely what Xi has fixated his eyes upon. According to the current rules, Mr Xi must step down as the leader when his term ends in 2022 and as tradition dictates, a successor must be appointed. While only time will reveal whether Mr Xi steps down from the presidency at the end of his term, it increasingly looks that he is not keen to do so, having failed to hint towards any successor for the time being. His apparent intentions to stay put were further solidified with the appointment of the new members to the Politburo Standing Committee, the highest decision making authority in the country after the president. Each of the members appointed to the body is over 60 years of age, which means that they are highly likely to retire when their term comes to an end with the next meeting five years later. Interestingly, two-thirds of them are also known to be Mr Xi’s loyalists.

Xi Jinping Thought: A force to be reckoned with

“Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” or the “Xi Jinping Thought” for short was written into the party’s constitution at the end of the Congress. The thought consists of 14 principles calling for deep reforms, conserving the environment, the party’s complete control over the army, and the importance of the unification of the country. The development was highly publicised and with good reason. With the “Xi Jinping Thought” embedded in the constitution while still being in power, Xi Jinping has drawn comparisons from all over the world to Mao Zedong himself. Moreover, he has ensured that anyone that opposes him will do so at the cost of their removal from the party. When Xi asked the delegates at the end of his address for any objections, shouts of “meiyou” which means “none” rang through the Great Hall of the People.

Mr Xi has declared the start of a “new era” for China, and undoubtedly for the entire world. It is therefore important to ask what significance these developments hold for the country and for the world at large.

What this means for China

The inclusion of Xi’s thought in the constitution means that the same will be taught in schools, colleges, and other institutions throughout the country, infusing his ideology among the Chinese on a cultural level. Abraham Denmark, director of the Asia program at the Wilson Center puts it aptly when he says that the move “greatly increases, … broadens, and deepens Xi Jinping’s personal power within the Chinese system”.

The president has already found a wide support of the Chinese population with his push for modernisation and his crackdown on corruption has been hugely popular among the masses. Since his election in 2012, Mr Xi’s anti-corruption drive, famously known within the country as the “tiger and flies campaign” has either disciplined or expelled nearly a million party members. As his stance on corruption remains as stern as ever, many have come to view it as a political tool used by him time and again to get rid of political rivals. However, the corruption drive has undoubtedly proved to be effective and fruitful for the country’s business climate.

While Mr Xi’s crackdown on corruption has garnered immense coverage, the crackdown on humans rights activists and NGOs has not received its fair share. China has struggled for decades in its battle for free speech. In 2015, many human rights lawyers were detained and many international NGOs faced stricter curbs to keep them from functioning. As the president has left little room for any opposition within the party, the authoritarianism and censorship are by no means expected to be relaxed, ensuring that there is no opposition from outside the party as well.

Powerplay: China’s standing on the global stage

Donald Trump was among the world leaders who wished the Chinese president when he congratulated him on his “extraordinary elevation”. The reverence he holds for Mr Xi was quite apparent when he said: “some people might call him the king of China.” The surprise, however, came when North Korea’s Kim Jong Un congratulated the president on his “great success” since the two leaders are not known to be fond of each other. The intent here is clear. Both sides need a China that is continuously growing in power on their side in their stand against each other, and that means a closer association with Mr Xi. Chinese influence in the world is unlikely to stop there.

While speaking to CNN, James McGregor, author of “No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism”, mentioned that “given the chaos in Washington and also the dysfunction in Europe, the world is looking for leadership.” Mr Xi enjoys a great level of stability and largely unquestioned authority in a time where the leaders of Western democracies face intense competition at home. As such, his message to his party and to the world is clear: in the coming decades, China will “stand proudly among the nations of the world” and “become a leading global power. ” However, it will do so on its own terms, emphatically rejecting the Western political models.

These intentions are perhaps best evidenced by The Belt and Road initiative, China’s attempt at connecting Europe, Asia, and Africa with each other through a modern take on the Silk Route, into which it has already pumped hundreds of billions as loans and aid to countries across all three continents. While the project has been met with opposition from Japan, India, and the USA, many of China’s neighbours have expressed their support for it, which speaks of its influence on the global stage.

With the people’s army under the control of the party, Mr Xi also looks to achieve the twin goals of increasing the military might and the protection of China’s sovereignty. “We will not tolerate anyone, using any means, at any time to separate one inch of land from China”, he said in his address which is seen as a warning to both Hong Kong and Taiwan. Enhancing combat capability is also linked to the Chinese interests in the South China Sea, where its activities of building and militarisation of islands have received backlash from the international community.

“If one is big”, Mr Xi said on the final day of the Congress, “one must act big.” There’s no doubt that Mr Xi intends to put these words into action at the global level. Lee Kuan Yew once rightly pointed out about China that the world would do well to remember: “The size of China’s displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”

UK Attempts To Bypass European Commission On Brexit Blocked By Brussels

As the UK and EU draw deeper and deeper into uncharted waters, Brexit negotiations are becoming increasingly erratic. As negotiators from both states met this week to discuss items such as the Northern Ireland Border, the rights of EU citizens currently residing in the UK and the notorious ‘divorce bill’, there have been numerous reports of frustration within the British camp.

The officials pointed out that both French and German leaders had agreed prior to the talks that negotiations would come “as a single package” where “individual items cannot be settled separately” and that no member state would abstain from negotiations in favour of individual agreements.

One year on…

It has been over a year now since the UK referendum in which the country voted (at a rate of 52% to 48%) to leave the European Union in an unprecedented political and economic chain of events, the repercussions of which will take years to fully realise but which the world glibly knows as Brexit. It’s a small name for such a political leviathan. Many of the world’s leading bankers and economists still aren’t sure what to make of. Recently CEO Lloyds Bank Antonio Horta-Osorio (who has been lauded for restoring the bank’s profits to pre-financial crisis levels) expressed doubt and uncertainty over the long term economic effects of Brexit. It’s somewhat telling that former Prime Minister David Cameron resigned shortly after the vote, claiming that his involvement in the ‘Remain’ campaign put him at odds with the will of the people but it’s possible that he had the prescience to realise that he had no hope of taming this wily and unpredictable beast. One year on, the beast only seems to have become further enraged by the negotiating process.

Difficult negotiations

Theresa May has gone into Brexit negotiations with some questionably aggressive negotiating tactics. The first round of talks were mired by her strangely audacious assertion that “no deal is better than a bad deal”. The frustration has clearly been felt on both sides with chief negotiator Michel Barnier urging Mrs May to begin negotiating “seriously”. The French government also demonstrated an unwillingness to circumvent negotiations earlier this week, stating that it “fully supports, on the substance as well as on the method, Michel Barnier’s negotiating mandate” and asserting that claims that Mrs May can somehow bypass the procedure “are founded on absolutely nothing and do not reflect reality”. Brexit Minister David Davis, however, retains an optimistic tone, stating;

“Our goal remains the same: we want to agree a deal that works in the best interests for both the European Union and the United Kingdom and people and businesses right across Europe. We’re ready to roll up our sleeves and get back to work once more…”.